European shares dipped on Tuesday while German bond yields rose, with investors scrabbling for clarity over whether a high-level meeting on Greece's debt crisis might herald a significant breakthrough.

The euro rose nearly 1 percent against the dollar, which earlier hit a 12 1/2-year high against the yen, but traders said this was related to an above-forecast rise in euro zone inflation rather than to the Greek drama.

The leaders of Germany and France and Greece's international creditors agreed late on Monday to work with "real intensity" as they try to reach a deal that would prevent Athens from defaulting and potentially leaving the euro zone.

Greek Prime Minister Tsipras said Athens had sent creditors a "comprehensive" and "realistic" package of reforms and urged Europe's leaders to accept it.

"The fact that five such political and financial heavyweights met about Greece means they are trying to force a break in the political deadlock and that's a positive development that's likely to lift risk sentiment. But we will have to wait to see the Greek reaction," said KBC strategist Mathias van der Jeugt.

Athens is due to make a 300 million euro debt repayment to the International Monetary Fund on Friday.

The pan-European FTSEurofirst 300 stock index fell 0.5 percent. Germany's DAX was down 0.6 percent, as was the main Athens stock index.

Yields on safe-haven German 10-year bonds rose 8.5 basis points to 0.6 percent, while those on lower-rated Spanish, Italian and Portuguese debt touched their highest of the year after the data showing inflation resumed in the euro zone last month.

Prices rose 0.3 percent, beating forecasts of a 0.2 percent increase.

Earlier, Asian shares fell for a second day as a strong dollar weighed on commodity prices.

China's CSI300 index of the biggest listed companies in Shanghai and Shenzhen rose 1.7 percent. After rising almost 5 percent on Monday, Chinese indexes have regained nearly all the ground lost in a sell-off last Thursday.

The euro was up 0.9 percent at $1.1022.

"A spike higher in the euro near the 50-day moving average, helped by the better Euro-area consumer price inflation, is putting pressure on the dollar," said Keng Goh, a strategist with RBC Capital Markets in London.

Earlier, the dollar rose to more than 125 yen for the first time since 2002, peaking at 125.07, before retreating. It last stood at 124.74 yen, flat on the day.

Aussie

The Australian dollar was up 1 percent at $0.7680 after the Reserve Bank of Australia kept interest rates steady and did not offer a clear bias to ease policy again.

Oil prices rose as strong demand outweighed expectations that the Organization of the Petroleum Exporting Countries (OPEC) would not cut production when it meets in Vienna on Friday. Brent crude was up 41 cents at $65.29 a barrel.

Gold held steady at $1,190.46 an ounce, down from Monday's peak above $1,200.

(Additional reporting by Emelia Sithole-Matarise, Francesco Canepa and Jamie McGeever in London, Lisa Twaronite in Tokyo; editing by John Stonestreet and Gareth Jones)